The old saying that money isn’t everything seems to epitomize President Obama’s inept attempts to jump-start the economy by throwing two to three trillion dollars at it. Nothing appears to be working.
First he signed a nearly $800 billion spending stimulus bill to pump money into the states through a retro-New Deal-style wave of public works projects and the financial markets tanked.
Then he announced a second effort to pump $275 billion to bailout subprime mortgage holders threatened with foreclosure and the biggest banks, already tottering toward insolvency, fell into an even steeper nose dive.
Then the U.S. Treasury and the Federal Reserve unveiled yet another public-private economic rescue plan to leverage $2 trillion or so to buy up toxic assets in the financial industry and other businesses teetering on the edge.
It was the administration’s second attempt to sell a warmed-over plan that failed to impress Wall Street and the global financial markets. Investors here and abroad fled U.S. equities in droves.
No matter what Mr. Obama has done thus far, he has failed to lift the mood of deepening pessimism that blankets the investment community and the wider economy.
As the week opened, all of the stock market indexes were continuing their rapid descent, with the Dow Jones Industrial Average sliding towards 7,000. There were as many explanations for all this as there were economic analysts, but it all came down to one common denominator - confidence - and the administration wasn’t providing it.
“The biggest thing I see here is the incredible pessimism. The government is doing a lousy job of alleviating fears,” complained Keith Springer, president of Capital Financial Advisory Services.
Indeed, there seemed to be only messages of doom and gloom coming out of the government. Fed Chairman Ben Bernanke is pushing recovery off until 2010, possibly 2011. Mr. Obama and his top advisers were saying it could be years before the economy turns around, maybe not until his term is over.
For the man who had expressed admiration for President Reagan’s eternal optimism, Mr. Obama’s economic rhetoric seemed stuck in the 2008 campaign offensive.
“I just would like him to end by saying that he is hopeful and completely convinced we’re gonna come through this,” former President Clinton suggested last week.
Writing in CNNPolitics.com this week, global economic analyst David Smick echoed Mr. Clinton’s advice. “Constantly suggesting, ‘If the stimulus doesn’t work, there’s more to come,’ only destroys confidence. Investors and consumers are encouraged to hold off, to see if a better deal materializes down the road,” Mr. Smick said.
No one expects the economy to turn around anytime soon, no matter what Mr. Obama tries. But there is the reasonable expectation that a new administration can at least change the nation’s psychology and that hasn’t happened yet.
Indeed, the Washington news media has begun to suggest that the bear market and growing investor fears are inextricably tied to the loss of confidence in Mr. Obama’s economic policies.